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tv   Key Capitol Hill Hearings  CSPAN  November 20, 2013 2:00am-4:01am EST

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it would require raising some additional revenue. if that is not a possibility for the republicans, something large is not likely. there is other ways for these countries to work things out. i would leave it to them. >> would you say it has not worked out all that well for the republicans but there was a sense that the administration was not getting involved. it looked like the administration was sitting back and letting republicans dig their own whole. you're going to leave it to the budget conferees on the hill. are you going to be more actively involved this time? >> just to be clear, we said in october the congressman needed to extend the debt limit. we kept him closely informed literally every week. and there was not a negotiation over the debt limit. it was a question of congress
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figuring out how it was going to deal with the thing they had to deal with. that is protecting the full faith and credit of the united states. the budget conference is an intrinsically congressional process. one of the few things that does not come to the president to be signed. the house and the senate agree on a resolution and it sets their government on how they will handle operations in budgetary matters. our budget experts consult with people on the hill and answer questions. it is intrinsically a congressional process. our view is quite clear. the president has budget is something he sticks by. it represents what he offered to the speaker at the end of last year. it is i think the right solution. we have to see where this conference goes.
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lex let me ask you one specific issue on appropriations. max baucus, the chairman of the senate finance committee will resent a plan on which he has been working on for corporate tax reform. in particular the issue of taxation of overseas earnings. there is a lot of -- as you know, you hear a lot of concern about this issue. i do not know if you had a chance to see this latest proposal. in the course of this budget, this may be an opportunity to do with this issue which does worry business people. >> i talked to senator baucus yesterday. i think it is a very constructive step that he is putting forward a draft. i look forward to studying the details. from what i understand it shares
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some significant characteristics with the president's framework and which i think has a certain amount of convergence between democrats and republicans. i hope the democrat engage with him on it. when you let the majority work of actually do the right thing. if you let the majority work on tax reform, the president outlined in july every possible path. if you cannot do everything, have our statutory rate not be something that drives business out but attract business. eliminate some of the tax provisions that skew decisions and there is the benefit in business tax reform, in tax reform in general. there is some one-time revenue that comes in. the president said in july we ought to use that to jumpstart our investment in infrastructure. you cannot use it to lower tax rates forever because it would not pay forever. it is one-time savings that we inc. would be an anonymous shot in the arm to the economy.
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it would build the foundation for strong growth and job creation economy going forward if we put it into infrastructure. i am hoping this conversation can move forward. there's an awful lot of issues moving through congress where i do think there is the potential of consensus. you look at tax reform and immigration reform and the "farmville". i hope that october represented something of a threshold that we crossed over. if we can see processes where ideas are put forward, where it is about trying to see if there is common ground. it would be a good thing for the country for its would you see the u.s. economy? we have had a couple of months of better employment growth area unemployment is still high. the real unemployment rate, you account for those people who dropped out of the workforce. growth has been pretty soft. what is your expectation now going forward over the next year
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or so, are we going to be stuck in this rut of over two percent growth and still high unemployment? >> if you look at the economic data from the last few months there are a lot of encouraging signs. we are seeing the housing sector doing much better. we are seeing manufacturing doing better. private sector, jobs. the jobs numbers that came out a week ago went back and corrected numbers for the previous couple of months showing that we have had 200,000 jobs which is higher what the original numbers were. it is showing a significant trend in the right direction. if you look at what has been going on the last year we have had an anonymous amount of fiscal drag. some of it was intentional, the phasing out of payroll tax holiday.
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the imposition of lower spending levels. some of it was unintentional. sequestration kicking and because congress was unable to agree on a set of medium and long-term alternatives. that fiscal drag runs its course. there are various estimates but it is over 1.5% of gdp of fiscal drag. andy the year with just over two percent gdp, it gives me reasonable optimism that going into next year it will be better than that. you look at the jobs numbers from last month, we have seen state and local employment making up for declines in federal employment. during the depth of the recession it was the other way around. state and local government was shrinking. if the headwinds abate which they will and the rest of the economy from housing to manufacturing to state and local
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government are doing better, those are all indications that we ought to go into next year stronger. >> we had the strongest employment growth in october for quite a while despite the government shutdown. some people suggested we might shut down the government more often. we might get private sector job growth. >> the economy would have done better if we had not had that debate here in washington. the truth is in 2011 and 2013 we had not seen government debate policy uncertainty, putting a kind of call on investment activity, we might be seeing the kind of recovery we all want. i am curious what the views in this room are in terms of marginal investment decisions and how the debate in washington effects the decisions that people in real businesses are making. from the conversations i have had with ceo's it is
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substantial. >> and want to come to questions from the audience. let me turn to financial reform. we have had dodd frank, we have this issue and a number of issues related to that. one particular thing i want to ask you about is the volcker rule. using their own money for proprietary trading. you have said that you want outlines from the regulators at the end of the year. >> i do not want outlines, i want to rule. >> what are we going to get, is a clarity? >> i'm optimistic we will see a role by the end of the year. i have met under pretty regular basis with the regulators. five different agencies have to come to the same place. it is a consultative process. it has to come to closure. it was an important part of dodd frank. it is important in terms of financial regulatory policy. it is important in terms of confidence in government. i think that if you look at the time from dodd frank being enacted to now there were a couple of years when every effort to delay the implementation of dodd frank was
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used from slowing down funding agencies urging congress to repeal dodd frank. for the last year we have seen a different and vernon. we have seen an environment that need for certainty and acceptance, that dodd frank is the law of the land has replaced the effort to delay and perhaps repeal it. but i became secretary i moved in on that opportunity and pulled the regulators together and said you need to figure out what it is that are the differences between agencies and we have to come together every few weeks to talk through the issues. you need to make decisions. the major issues are resolved. they are figuring out it is a complicated piece of business. on the one hand they have to preserve the ability of firms to
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make markets and on the other hand because of the policy of stopping proprietary trading, needing to shut down the kind of risky positions that firms were holding on their own account. i am optimistic that they are getting there. >> you expect there to be -- the role will be agreed and published by the end of the year. >> that is what i have urged them to do and just last week the president reiterated it. >> it does look like a pretty hostile environment for financial institutions right now. you look at what is going on at jpmorgan, the way the administration is dealing with financial issues. there is concern on wall street as you know. maybe this is going too far, and the environment you are creating is crushing the opportunity, the incentive for companies to take risks and that will jeopardize the economy. are you concerned you have the balance wrong? >> we have the deepest, most liquid financial markets in the world. it is part of the vitality of the economy. we have come out of the worst
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economic crisis since the great depression and it was an economic crisis that was brought on by practice this is should have been better regulated. in my view going into this has been consistent. we have to try to figure out the right thing. this is not a question of do everything you can or do as well as you can. it is a question of trying to get that balance and do it right. i have said that on that line when you're not sure given the crisis of 2008 and 2009, you can err and corrected if you're doing too far. others say you less and come back and toughen it up. the american people are still recovering from the economic crisis. we have to be able to assure them that will not be another financial crisis anytime soon. >> we have a few minutes for questions. let's get a microphone. if you could identify yourself, take your name, rank, and serial number. >> early in the conversation he made a couple of almonds about the debt ceiling. -- comments about the debt ceiling.
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[no audio] [inaudible] what would be the scenario [inaudible] >> the important thing to remember about the debt ceiling is that it has been at the end >> the important thing to remember about the debt ceiling is that it has been at the end of decisions that have been made. congress has appropriated money, revenue rules have been set. in the end, the debt limit comes after all the policy has been
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made. so there really is no alternative but to raise the debt limit when you need to borrow in order to pay the bills. you can be a full throated debate about what our policy should be on any of those other areas but there cannot be a question once we have made commitments as a government that we keep our commitments. it cannot be that we have contractors who have done the work and we say we will not pay them. it cannot the that people have entitlement benefits but they do not get paid. the full faith and credit of the united states whether it is bonds or contractor benefits have to be honored. i think that the whole idea of debt limit reform is something we should think about because the kind of brinkmanship that we saw in 2011 and 2013 i think did harm the economy. it did hurt confidence. it did reduce investment act
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committee. and hiring activity. it does not serve a useful purpose because it does not really affect the policy. if there is a debate about what we should do in tax reform in terms of how much revenue and how much entitlement reform to do, that is a different matter. the president has put a plan on the table and we have been ready on multiple occasions to reach an agreement on a bipartisan basis. it cannot be that you get to the end of all of the taxing and spending decisions and say the government cannot pay its bills. i do believe congress has to do it. i think if you look at the comments that have been made by congressional leaders, republicans and democrats, i do not think october was something they want to repeat. i am quite hopeful they will do it in a businesslike way ahead of the scheduled expiration of the debt limit and certainly without the brinksmanship we saw a few weeks ago. >> we have come through a
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difficult time in terms of the economy. you mentioned about the marginal decisions on investment. i would say if you polled the businessmen they would say they had a particular lack of influence on policy today. in other words, the view of industry and commerce are not really reflected in policies coming out of washington and so on. i wonder if you have any view about why that is. >> i'm not sure i agree with the premise. i think that i know i speak with ceo's on a regular basis. the policies we designed, we designed them with the real intention of trying to meet the needs of businesses that want to expand and grow the economy. our tax reform principles reflect much discussion with the private sector. i think that there has been a bit of an evolution of the parties in this country. i think that some of the traditional support in the republican party for larger
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businesses and financial enterprises has changed a little bit. that may be what you are referring to. businesses thought we were listening to them in september and october. what i heard them say is we go to the hill and we do not think people are listening to us there. i think a lot of people on the hill were listening. if there are 50 or 100 people who do not have a traditional view it does not mean no one else is listening. i urge people not to focus on 50 or 100 might have a more radical idea of what to do but focus on the core of members when it came to a vote on october 16, the overwhelming majority did what business made sense -- thought made sense. i think you could find a bipartisan majority that would do the right thing.
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that's you have a hard break at 930 and the stock market is about to open. you have got to get to your day job. thank you for joining us. >> former white house economic onector, larry summers economic growth. this is 35 minutes. >> it is my great honor and privilege to be here with larry summers. when he was two years old his parents took him to his
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pediatrician who happened to be my father. according to larry's father, a story he told, his parents expressed concern that larry was not talking much at two years old. supposedly my father's response was i would not worry about it once he starts. he will never stop. so with that. >> moving right along. asked if we had been able to post questions i would have asked you but i will ask for a show of hands. if you had to pick the top priority, the single top economic rarity for the u.s. government right now and they give you a choice between reducing the long-term deficit and doing something to spur growth in the short-term and the long-term, deficit or growth, you only get one vote. how many people would choose the deficit over growth? how many people would choose rose over the deficit?
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i have been here watching for 30 years. for much of that time we have been obsessed with reducing the deficit. that has been true in the last few years. you think that is a dumb idea and so do a lot of people here. why? >> guys are right. -- you guys are right. they are wrong. you guys are not getting your way. we have had 10 bipartisan budget processes, we have zero bipartisan growth processes. we have had budget some is -- summits up the union. we have -- somehow, the business immunity was complicit because they have been substantial financial supporters and encouragers of it. we have gotten the idea that addressing the deficit is the defining challenge facing the
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country. there are three relevant realities. on the current forecast the debt to gdp ratio will improve of the over the next decade. the debt forecast online with the way they looked in terms of decline after the 1993 budget deal. for 10 years this problem is at hand. second, basing policies on these forecasts is longer than that is kind of a crazy thing to do. if you take the confidence interval around the deficit forecast, not 20 years out, not a 95% confidence interval but five years out, a 90% confidence interval, that confidence interval is 10%. it is plus or minus 5%. if the geomet climate change people were telling us it was negative three degrees to plus 6 degrees we would not be acting on the problem and we do not
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know what the long room -- run deficit will be. the most important thing is if you take the longest run deficit, you take the official forecast of it, if we increase the growth rate by point two of 1%, point two of 1% to my you solve the entire identified fiscal gap problem. i'm here to tell you that in a country that is stifling entrepreneurship in a variety of ways to my in a country that is star for public investment that lets canidae airport languish the way we do, in a country that is missing a huge opportunity on immigration reform, and a country that is maintaining a regulatory and tax environment that does not recognize the confidence is -- that confidence is the cheapest form of stimulus, increasing the growth rate is easily attainable.
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the truth is that if we get past our current perhaps protracted bout with secular stagnation and get the growth rate up, that it the debt bubble will stay in control. and if we continue to the a country that does not increase the fraction of adults that are working mother does not catch up with its gdp potential, that grows at two percent or less what we can have all the entitlement summits in the world and we are gradually going to accumulate debt and have a serious debt problem and so we just have gotten our focus to the wrong thing. we should be focusing on growth. growth creates a virtual circle
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which creates more growth. employers work harder to train the next generation of workers. in a growing economy, there are more ladders for kids to get on which puts them in a better position to lead 10 years down the road. there is more profit that can be reinvested in r&d and long-term capacity. the growing u.s. capacity, there is a stronger world economy which is ugly to be a successful world. -- world economy. this is where our priorities should be and we have just in my view, it is sad to say, lost track of it as a country. >> why is it wrong to say that we know we have an aging society, we know we have some benefit promises that are going to be expensive to keep, and what he not be prudent to do something about growth and package that with things that we know take a long time to save money and do it now rather than bequeathing the problem? >> there were some real problems in the kitchen on the titanic. there were.
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they were the wrong problems to be working on given the challenges the titanic faced and given that management had only some much attention that he could vote itself to. it is the same thing. it would be better to be thinking about a range of long- term adjustments about 2035. it would be. we really cannot do very much. we had difficulty passing any legislation. in that context the right focus is on what is most important. things that contribute to growth. what is surely necessary is things that contribute to growth. i think that the odds are we're going to need to make entitlement adjustments at given the uncertainties in the forecast, these forecasts are wrong by five percent of gdp all the time. they were wrong on the high side. the forecasts were to pessimistic in the 1990s, they were wrong on the low side, they were too optimistic in this period. when people are talking about entitlement reform, they are talking big numbers.
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they're talking about one percent of gdp. 1.5% of gdp. it is the right thing to be thinking about. one thing a group like this camera member. it is the right thing to be doing. if you contribute the absolute maximum you are legally allowed to every year from the time your 19 to the time you are 65, your social security benefit is less than $40,000. and so there may be a case that we need to adjust the formula in various ways. how excited can you really be about the central national project being adding this benefits for the best of the social security recipients from 38,000 dollars to $36,000 rather
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than figuring out a way to grow the economy faster so there can be more benefits for everybody? the right debate to be having is not the debate about containing the budget. it is about how best to spur growth. >> used rather frightening phrase about secular stagnation. do you mean that we are at substantial risk of having an economy that perks along at two percent growth and has one in six men between 25 and 54 on the sidelines of the labor market for years to come? >> i am not predicting it. i do not see how you can look at the data and not say that debt and that is a substantial risk. there are two points. four years ago right now, financial repair had happened.
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the tarp money had been repaid. credit spreads had largely normalized. there was no panic in the air. with respect to thinking institutions. it has been for years. we have not grown the share of adults who are working in the united states all since that time. we have not gained at all on the potential of the economy. and so the growth machine we
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predicted, the forecasters have been consistent. absolutely consistent. a return to accelerated rate of growth nine months from now. there has been the forecast for the last four years and he has always been wrong. it might be right this time. we studio to be right but i do not see how you could be certain that it is right. and if you look at, there is a troubling feature it seems to me, the experience before this crisis and that is what has caused me to be more alarmed. think about the years between 2004 in 2007. we had what consensus opinions think were excessive budget deficits. we had what consensus opinion now thinks were excessively easy monetary policies. we had what universally is regarded as having been a massive commit him prudent, and
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excessive credit expansion. we had what is regarded as having been an inordinate housing bubble which created a false impression of wealth and created vast and excessive construction. you might think that with all those things going we would have an economy that would be overheated. but if you look at the unemployment statistics, if you look at the inflation statistics, if you look at the growth statistics, the economy was bubbling. there were bubbles, all right but the underlying real economy with a huge support to demand for all of that was not overheating. by any stretch of the imagination. and so it has now been a decade since we have grown at a rapid rate in a remotely healthy and sustainable way. and that commit seems to me, has to be the deep concern as you look to the next decade. things happen. when i came into the clinton administration in 1993, we did a
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comprehensive exercise and the treasury was part of it, the fed was part of it, the imf was part of it. we asked all the outside forecasters. looking to the long run, there was a debate. there were pessimists who thought japan would grow by three percent a year -- 3% a year over the eight years and they were optimists who thought it would grow by 4% a year over the succeeding 20 years. it has grown by about .6% a year.
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over the succeeding 23 years and so gdp is only slightly more than half today of what we universally believed then because permanent stagnation was kind of inconceivable. in japan, what happened was growth was very slow and growth was slow and after a while, everyone got used to it and they stopped calling it a demand cap and they started saying it was all that could be done and to some extent, that became true because after all those years, the companies do not reinvest month the company's lost the mojo, they were not in the position to compete so at a certain point, supply came down to demand. and he got used to the idea that japan was a different kind of growing country. i am not saying we would have a gap but we are already defining our aspirations as measured by potential gdp way down. so if you ask is there a risk of
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this emma absolutely. does the risk, does the prospect seem as likely or more likely, then the high optimism scenario where we go back to an era of 4% growth? between the pessimistic scenario and the hyper- optimistic scenario, i would choose the pessimistic scenario. things have a way of working out. my guess is it will be better than that. the thing that policymakers should be accessing about is the risk of this secular stagnation thing. that is a much more urgent threat to every american interest than anything about social security benefits in 2035. that is a much greater risk to american interests than anything about the emergence of hyper- inflation coming from monetary policies. that is where the concern not to be. the gap between winners and
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losers in our society is wide by historical measures and has been widening. should we worry about that and if so, what should we do about it? >> we should be worrying about it. if the only thing that was happening was that, i would argue that we should be worrying about it but i would understand why other people would feel that is what the market was doing and you should not make that either preoccupation. but here is what is really scary. for 240 years since george washington, and has always been true that we became a country with more equal opportunity every generation. that is no longer true. in the
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united states. the gap in life prospects between the children of the rich and the children of the poor has widened over the last 40 years. the gap in the college attendance rates between the children of the rich and the children of the poor has widened over the last 40 years. it is not that we do not know how to make progress. if you look at the achievement gap between black and white students, that achievement gap in 1970 was twice as large as the gap tween the children of the rich and the children of the poor. you look today, the achievement gap between the children of the rich and the children of the poor was twice the gap between lex and whites. so we know how to make problems. with 40 years of effort we have a long way to go. we have made enormous progress. with respect to civil rights. if the problem is the color line in the 20th century, the home of the 21st century is the class divide and what it means for opportunity. and so widening income
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distribution combined with more and more ways in which the fortunate can advantage their children, i think is profoundly corrosive. what is it that should be done? we need to find ways to ensure that the educational opportunities open to every kid are like the educational opportunities open to the kids of the people in this room and we are not close to that as a country. we need to make sure that we're there are slots to be given, whether it is the government giving rights to spectrum or mining rights are whatever it is, that had those processes are open and inclusive and open to everyone and are not processes that reward the fortunate, i have written a lot of papers about the important incentive effect of taxation.
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i believe that we cannot punitively taxing we cannot go back to the kind of tax rates the country had in the 1950's in the 1960's and the 1970's. i am here to tell you that there are a substantial set of loopholes, special interest privileges, and the like that distort the allocation of resources, make the economy function less well and also act to reify and reinforce any -- inequality and that serious tax reform that went after those
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inequities could both make a fairer economy and make an economy -- >> corporate taxes are something people care about. what would you do if you could write the corporate tax thing, how would you handle the question of overseas earnings, what is the right way to do this for the economy and the social good? >> and d me and him -- indulge me if you will in an analogy. you have a library in the library has a lot of overdue books. you could have an amnesty where people got to bring back their books and they did not have to pay the fine. that would make sense. another thing you could do is you could say, we're never going to have an amnesty. you had better bring back your books because no matter how long you keep your books you're not
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going to get an amnesty. that would be kind of harsher but that would make sense, too. a really idiotic thing to do would be to put a sign on the door of the library saying, no amnesty now but stay tuned come a there might be one next month. that would be the dumbest imaginable thing to do. what has been the u.s. corporate tax debate for the last five years? it has been exactly that. no break on repatriation now. the constant hope that there may be a break on repatriation in the not too feet -- distant future and so why would anyone ring back their money in the face of that? what should we do?
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i think the principle is clear. you could call it territorial with a minimum. a lot of different things you could call it. we should eliminate the distinction between repatriated profits and non-repatriated profits. we should establish in a balanced budget way a minimum tax on global income. and so whether the rate would be in the neighborhood of 15%, you pay that, if you brought your money back, you would pay that, if you left your money in ireland, and there would be no longer an incentive to keep money offshore. if you did it right, there would no longer be -- there would not be any revenue loss to the government. but look, there are things we need to fix to stimulate investment in the country.
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but i do not know that much about multinational business but here is something i think i do know. if you measured it right, the places abroad where the american companies make the most profits would be places like china, japan, terminate, and france. that have -- germany, and france that have a good economies. if you look at their tax returns, the places to show up having the largest profits are places like the netherlands, and ireland, in case you're not getting it, the kaylynn -- the cayman islands. it really should not be that way. it does not need to be that way and it is not really making the country more competitive or creating jobs to have it be that way. so, the principle is, do not try to raise more money, but try to raise money in a better way and do not keep a set of uncertainties that all but forces everybody to leave their money abroad. >> i could keep going but if you have a question. ok. is a disaster. how much damage has that done to trust in the government to do anything?
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>> we will see. it cannot be good. [laughter] look, this is an unhappy tale. many of you know from your own experiences that the right general rule on large i.t. projects is, take what they say, double it, and then move to the next higher unit of time. so days become weeks and weeks become months. i could continue the sequence. that is true when it is done in the private sector. and there is no organized constituency for failure. and when it was done in the public sector there was a massive organized constituency for failure that organized as best it could to ring about failure by starving the funds and objecting to the procedures and so on.
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it was next-door nearly difficult task -- extraordinarily difficult task that was massively underestimated and i do not think there is any legitimate excuse for how badly it was underestimated. i think you have to say, if you look at the capacity of government to do things, you have to be less optimistic about that than you were today. and i think it is a huge imperative to do something that will give confidence and as i wrote a few days ago, the great danger at a moment like this: the great wager for a football team that is down by two touchdowns -- and danger for a football team that is down by two touchdowns in the third quarter is that they will abandon their playbook and start throwing hail marys in every
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direction. the great danger at a moment like this a -- is you will have promise that she will promise days when you have great results and make confident claims about what will happen next, you will try to jury rig something rather than recognizing that given the that of the hole you're in, it will be difficult. this is going to take -- as difficult as this was to do it right in the first place, it is going to be more difficult to fix. but i think it is hugely important that it be fixed. at the same time, i do think that we do need a kind of compact in this country where we debate things a wee debate things and we debate things, and when we come to a conclusion, everyone tries to make them work, and if they do not work, at a certain point, we draw lessons from that. those who try to bring about failure and then say we saw failure, therefore we cannot
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rely on government, i do not think they are performing in a way that they should be proud of either. i do not think there is anybody in washington who is emerging as a winner from how this appears. i do think that if i may say so, those of you, who i suspect is majority of people in this room, are of a more conservative and then i, -- bent than i, recognize that of the strategies that could happen pursuit that would result in universal health care, the one that was pursued was the one that was most respectful of the traditional market, that went with a grain
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of the current system, was the one that was closest to what had been proposed by republican think tanks like the heritage foundation and implement it -- implemented by conservative state administrations. and so if it does not -- if this kind of commendation -- combination of government operating at the edge rather than taking over the whole system is too difficult to make work, that -- there are conclusions from that could -- that could be drawn in both directions, but my hope and my expectation would be that this will, over time, be fixed and made right. and i think it is worth remembering, just as a general
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matter, having lived around washington things for quite some time. it was only two months ago, less than two months ago that the budget deal and the budget and the fact that the republicans were face down on the debt issues meant that they could have been seen as being in deep n-terminal difficulties and that now is completely out of everyone's mind and no one remembers that as an important event all of six weeks later. and so it is a great mistake to think that whatever the mood is right now, that that is the mood three months are now, let alone three years from now. there is a larger universe of possibility. ask you mentioned japan, slow growth, more than a decade, two decades. abe comes in with an approach of
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three arrows. we see one of the aeros fired, maybe the second one is in the quiver, the third is not out of the talking shop yet. i wonder what your evaluation of that economic policy is and the likelihood of success. >> it is a little bit like pulling your goalie and a hockey game. it is not that great a strategy. it is just if you do not pulled the goalie out and the clock runs out, then you lose for sure. and the -- so you have to try something new. so the basic thrust of a substantial commitment to expansion was the right one. i think there have been some encouraging signs so far in increasing growth expectations, and the reduction and deflation
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and expectations. the prospects for japan looked considerably better than they did a year ago. that is a tribute to the policies. i do not think we will now -- know until nine months from now. they will put the value added tax in and either the economy will have weathered that and the growing -- continue to be growing in a reasonable way, or as it happened in the past, there will be a run-up of gross until they do that, and then there will be an air pocket of spending afterwards and they will be back in the soup and i cannot confidently predict between those two possibilities. both i think are real
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possibilities. >> a question from one of the ceo's here. >> you talked about the secular challenges to long-term growth. could you talk about the role of labor in society? it feels like the combination of globalization, automation, we had a wonderful discussion at lunch that said even at the university level there will be increasing pressures on traditional jobs, maybe not at the top universities but at many others. it seems that if you are at the top, today's world offers more opportunity to contribute globally and if you're not, the pressures for middle-class jobs and other things are just enormous. do you see an underlying trend here and what do you think it means in terms of long-term growth and the inequities in society that you described? >> if the issues that i called secular stagnation around lack of demand and all that are the issue for the next decade, the issue for the next half-century is the issue that you raised.
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there were some guys who wrote a book nine years ago about technology and its impact on employment. one of the most striking passages was they said, computers can do some things, but computers are not going to be able to do other things. their example, something that computers would not be able to do was make a left turn against ongoing traffic. google nailed that one within less than a decade. if you -- one of the things i have done since leaving government was spend a bunch of time out in silicon valley. and the set of things for which they are developing capacities to do is mind-boggling. it has always been true before that people, jobs were eliminated in one sector by
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productivity increase and they went to somewhere else. and the people thought he could not happen. that is true with respect to agriculture, that is true to -- with respect to the luddites, it has always been true before. the fact that it has been true before does not mean it was always true before. house prices in america always wind up. it has always been true before is not a conclusive argument. i think our chances are maximized if our educational system is repairing as many people as possible to be as creative and flexible as possible. i think we are going to have to recognize that in a world where the potential rewards and leverage to the most creative are larger, that we are going to have to find ways of having some
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redistribution from the most creative to everyone else. the example i like to give is george eastman had some fantastic ideas about photography. he was very successful, and along with his success, the city of rochester supported a thriving middle class for two generations. steve jobs, equally fundamental innovation or more fundamental innovations, produced even greater success for him, and for his shareholders, but there was no comparable, large-scale, middle-class job creation. that is what we are going to have to work through. it is going to require us to be much more a manager -- imaginative and thinking about different kinds of service work and thinking about the quality
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of jobs and the dignity of jobs associated with the service sector. i am all for doing everything we can and there is a lot that we can do that is still not done to bring about a renaissance of american manufacturing. but china has gained competitiveness, gained share, innovated and raised its efficiency as much as any country ever will, and there are fewer workers in chinese manufacturing today than there were 20 years ago. there are fewer workers in chinese manufacturing today than there were 20 years ago. success, if and when it comes, is going to come from various kinds of service work, various
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kinds of greater customization. it is a tragedy that on the one hand, you are saying, and you are right, and i understand why you are saying it, that there may not be enough work to do. on the other hand, there are several million kids in this country who profoundly need individual attention and mentoring of a kind they're not close to getting. we do not have a way of bringing the people who want to work together with those and i do not think it is traditional government that will do it but i do not think it will be turning the country into some kind of libertarian paradise. >> join me in thanking larry summers. [applause]
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>> them bernanke delivers his comments before the national economist card -- club. >> coming up on washington journal, paul tonko of new york talks about problems with the website. a representative discusses what it negotiations. -- discusses budget negotiations. later, our spotlight features david wohlman of "wired" magazine. washington journal is space -- live every day at 7 a.m. eastern here on c-span. wednesday look at national security issues related to the federal workforce. it is the first in a series of hearings by the senate homeland security committee as it investigates who gets access to classified information. live at 2:00 p.m. eastern on c- span3.
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>> when president kennedy was dallas police officers ran up to the grassy knoll because people were pointing to it as a source of gunfire. the first officer had his gun drawn and expected upon the gunmen. instead, he encountered a man who provided secret service credentials. theh was familiar with secret service credentials. were givenfficers the same thing. apparently, there was more than one on the grassy knoll. the secret service and the warren commission has identified the location of every single secret service officer at that
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time and nobody was in dealing plaza. all of the secret service officers are taught to go with their protect these. they went with johnson. who were these people? they have credentials that no one can identify. i do not have an answer. the facts. people can make up their own mind. on the lasting legacy of jfk. it is part of book tv this weekend. tv is liveday, book for the national book awards in new york city. coverage starts online at book watch live coverage of the warts or money on c-span two. >> ben bernanke spoke about the economy on tuesday. the fed's bond buying program
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and keeping interest rates low. he has disappointed with the latest job numbers. monthsarks come two before the end of his tenure. this is 50 minutes. >> thank you. address.g back.nice to be when i began my time is chairman, one of my priorities is to be federal reserve more transparent and make monetary asicy is clear and transparent as possible. i believe then, as i do today, that transparency in monetary policy enhances understanding and confidence and promotes informed discussion of policy options. it increases -- it increases the mandated objectives and makes
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policy more effective by tightening the linkage between monetary policy and financial conditions. the financial crisis's aftermath became the federal reserve's main focus. following the stabilization of the financial system, we supported the economy's recovery from the recession. involved in communication and policy than ever before. my remarks this evening will discuss how the federal reserve medication has evolved in recent years and how it enhanced transparency.
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